These
special leave petitions arise from the judgment and order of the Division Bench
of the Madras High Court dated March 7, 1996
made in writ petition Nos. 17490 and batch and 147/96 and batch. The admitted
facts are that the petitioners are exporters of readymade garments to divers
countries. The export and import is governed by Foreign Trade Development
Regulations Act, 1992. The Government of India, Ministry of Commerce evolved
1992-93 Export and Import Policy declaring that the export policy to augment
productivity, modernization and competitiveness of the Indian agriculture
industry and service. For the year 1994- 95, export policy for the readymade
garments was notified in notification No.1 1-29-93 dated September 4, 1993. The policy classified allotment under heads, namely (a)
Past Performance Entitlement (for short, 'PPE'); and (b) Manufacturer Export
Entitlement (for short, 'MEE'); and (c) Non-quota Exporters Entitlement (for
short, 'NQE'). The Uruguay round of negotiations of the GATT
received final approval of the negotiations incorporating separate agreements
to diverse sectors including the Textile and Clothing sector. The latter is
known as the Agreement on Textile and Clothing (ATC). Thereunder, the
Government of India committed to phase-out incentives or quota by December,
2004 and planned to introduce changes in quota also w.e.f. January 1, 2005. The goal thereby sought to be
achieved is that an exporter, whether in India or abroad, would export garments
to any other part of the world without any quota restrictions for providing
right environment for textile and clothing exporters to be ready to achieve the
goal. Consequently, new export policy from ATC w.e.f. January 1, 1996 was introduced withdrawing the
previous policy referred to hereinbefore. it was initially notified on November 28, 1995 announcing total change in the
garment quota policy, the allotment for MEE and NQE system were thereby totally
withdrawn under the new policy. The new policy envisages only two methods,
namely,

(i)
Past Performance Entitlement (PPE) 80%; and

(ii)
First Come, First Serve (FCFS) 20%.

The petitioners
have challenged this change in the policy in the High Court on three grounds
one of which is promissory estoppel on legitimate expectation. The High Court
in the impugned judgment negatived all the three contentions, Thus, these
special leave petitions.

Shri Vaidyanathan,
learned counsel, contended that the Government had promised to grant MEE and
NQE quotas for those who upto date their quality of products by purchasing new
machines after expiry of 5 years life span or given promise that all those who
performed their applications MEE were entitled to NQE quota and that,
therefore, the respondents are estopped to recile from the promise made to
them. They cannot act in a way detrimental to their legitimate expectations. We
find no force in the contention. It is seen that the change in the policy is as
a result of GAAT agreement with all contracting countries.

The
quota system was available to export garments and clothing to European
countries, viz., U.S.A, Canada, Norway etc. The Government took
the policy that with a view to meet more competitive quality in the foreign
markets introduced FCFS system giving 20% of the export. PPE was provided with
80% of the export. The new dynamism in the policy would make the trade more
competitive and it will be in the best interest of the country and to boost in
export potentiality and foreign exchange, on account thereof MEE and NQE quotas
were eliminated and large allocation was issued to PPE system and rest of 20%
was marked for FCFS quotas were eliminated and large allocation was issued to
PPE system and rest of 20% was marked for FCFS system. It was also pointed that
the Government encountered that MEE system was beset with floods of false
declarations of the productive capacity by unscrupulous traders masquerading as
exporters.

Though
action was being taken against persons who committed fraud but it became
difficult to stop misutilisation of the scheme completely. Consequently, MEE
system was eliminated.

Though
incentives were provided under NQE system, the growth of non-quota exports was
not commensurate with the quantum of quota allocated to the scheme to encourage
such exports.

The
idea of permitting quotas obtained as incentives to be sold at premium is to
cross-subsidy the non-quota export and thus to lower the actual selling price
of the item, as an indirect subsidisation to the NQE exporters. But the foreign
buyers indirectly are constrained to bear the subsidy. With potential
development of the developed and developing countries in the international garment
and clothing market, the foreign buyers preferred other countries, instead of
purchasing from the Indian exporters to bear the indirect subsidy. Resultantly,
export of clothing has severely suffered at the 1994 end onwards. The
Government, therefore, took policy to abolish NQE system so that the genuine
quota exporters could do business so as to stop the malady and to preserve PPE
and FCFS system.

In the
light of the above policy question emerges whether the Government is bound by
the previous policy or whether it can revise its policy in view of the changed
potential foreign markets and the need for earning foreign exchange? It is true
that in a given set of facts, the Government may in the appropriate case be
bound by the doctrine of promissory estoppel evolved in Union of India question
revolves upon the validity of the withdrawal of the previous policy and
introduction of the new policy. The doctrine of legitimate expectations again
requires to be angulated thus: whether it was revised by a policy in the public
interest or the decision is based upon any abuse of the power? The power to lay
policy by executive decision or by legislation includes power to withdraw the
same unless in the former case, it is by malafide exercise of power or the
decision or action taken is in abuse of power. The doctrine of legitimate
expectation plays no role when the appropriate authority is empowered to take a
decision by an executive policy or under law. The Court leaves the authority to
decide its full range of choice within the executive or legislative power. In
matters of economic policy, it is a settled law that the Court gives the large
leeway to the executive and the legislature. Granting licences for import or
export is by executive or legislative policy. Government would take diverse
factors for formulating the policy for import or export of the goods granting
relatively greater priorities to various items in the overall larger interest
of the economy of the country. It is, therefore, by exercise of the power given
to the executive or as the case may be, the legislature is at liberty to evolve
such policies.

An
applicant has no vested right to have export or import licences in terms of the
policies in force at the date of his making application. For obvious reasons, granting
of licences depends upon the policy prevailing on the date of the grant of the licence
or permit. The authority concerned may be in a better position to have the
overall picture of diverse factors to grant permit or refuse to grant
permission to import or export goods. The decision, therefore, would be taken
from diverse economic perspectives which the executive is in a better informed
position unless, as we have stated earlier, the refusal is mala fide or is an
abuse of the power in which event it is for the applicant to plead and prove to
the satisfaction of the Court that the refusal was vitiated by the above
factors.

It
would, therefore, be clear that grant of licence depends upon the policy
prevailing as on the date of the grant of the licence. The Court, therefore,
would not bind the Government with a policy which was existing on the date of
application as per previous policy. A prior decision would not bind the
Government for all times to come. When the Government are satisfied that change
in the policy was necessary in the public interest, it would be entitled to
revise the policy and lay down new policy. The Court, therefore, would prefer
to allow free play to the Government to evolve fiscal policy in the public
interest and to act upon the same. Equally, the Government is left free to
determine priorities in the matters of allocations or allotments or utilisation
of its finances in the public interest. It is equally entitled, therefore, to
issue or withdraw or modify the export or import policy in accordance with the
scheme evolved. We, therefore, hold that the petitioners have no vested or
accrued right for the issuance of permits on the MEE or NQE, nor the Government
is bound by its previous policy. It would be open to the Government to evolve
the new schemes and the petitioners would get their legitimate expectations
accomplished in accordance with either of the two schemes subject to their
satisfying the conditions required in the scheme. The High Court, therefore,
was right in its conclusion that the Government are not barred by the promises
or legitimate expectations from evolving new policy in the impugned
notification.